Airlines sell seats on flights according to the date of travel, itinerary (origin and destination), fare basis, and class of service. These seats are sold direct by the airline or indirectly through travel agencies. Confirmation is provided to the passenger by the issuance of a ticket (either paper or electronic). The price of the tickets vary and depend on various factors, including market competition, the class of service, and the advance purchase of the transaction. The rules surrounding the variable prices are specified in a fare basis code, and filed by the carriers with the Airline Tariff Publishing Company (ATPCo). The prices or fares are published and distributed through several global reservation systems and accessed by agents to provide fare quotes, create reservations, and generate tickets.
Airline travel has become increasingly popular, and consequently there has been a marked increase in the volume of tickets sales. The time and effort devoted to processing and capturing ticket sales has been automated as technology has become available. The reservation systems provide agents with the ability to generate tickets through the autopriced mode or the manually priced mode. The autopriced mode provides the ticket for the straight published fare. No exceptions or discounts are available. Tickets sold using the autopriced mode are system-generated, and therefore guaranteed by the reservation system to be accurate as published. Tickets sold using the manually priced mode are agent-generated and not guaranteed by the reservation system. Corporate discounts or other discounts are available using the manually priced mode. In the manually priced mode, the ticketing agents have the ability to override the rules and terms of a particular ticket. This ability is a revenue loss risk to the airlines because the agents can sell tickets for less than the correct price. Because of the technology used in the manual process, this revenue loss risk is not preventable at the point of sale. Thus, there is a need to audit the accuracy of the ticket after the sale is processed and recorded in the airline's ticket database. The auditing process helps police the system to ensure that the rules are being enforced and inaccurate tickets are identified.
Auditing processes have been developed to systematically determine compliance with rules. Within the airline industry, auditing consists of repricing the transactions. Because numerous rules need to be checked, the process of repricing can be very time consuming. Errors identified in the audit process result in notification to the entity responsible for the transaction. Within the airline industry, the rules include ticketing and fare rules, and the error notification is often called an invoice or debit memo. The invoice calculates the value of the loss and requests payment. Current auditing processes have allowed airlines to recover revenue that would otherwise be lost. However, these auditing processes are inadequate in several ways. First, the number of tickets and the amount of detail on each ticket is too large for the system to handle, so tickets are continually backlogged in the audit program. In addition, the complexities of some contracts cannot be accommodated with existing audit processes, therefore these contracts are not audited and are skipped entirely. Furthermore, incorrect invoices can be produced by the auditing process. The incorrect invoices are often caused by contracted corporate fares that are not subject to the published tariff rules, and are not recognized by the audit program. The incorrect invoices create additional work for the agent and the airlines by generating correspondence and phone calls in efforts to resolve the problem. The incorrect invoices also create bad will with the agents, and cause the integrity of the audit program to be questioned. An additional problem of the auditing program is a maintenance problem. Maintenance of the audit system is additional to the maintenance of the fares and contract database systems.
In an effort to minimize the number of tickets audited, minimize the incorrect invoices, enhance client service and ensure recovery of lost revenue, an alternative audit system was introduced. The alternative program was named FARE, which represented the philosophy behind the program: to provide a Fair Audit of agency issued transactions and Revenue Enhancement for the recovery of lost revenues due to ticketing errors. This audit process could be applied to agencies generating a large volume of tickets each month. The FARE audit made it possible to not have to audit each individual ticket, which was overwhelming when a large number of tickets were sold. The large volume would support an audit on a sample of transactions and allow for conclusions to be drawn and applied to the population as a whole, instead of to just a percentage of transactions. Determining ticketing quality derived from a sample would provide benefits to both the airlines and the agents by allowing for a reduction in the volume of tickets processed through the audit program, and provide the agent with audit results at an overall summary level versus individual invoices to be process and paid. The results of the audit include the calculation of financial impact that is utilized for determining financial settlement.
Although the FARE audit minimized the number of tickets audited, minimized the incorrect memos, enhanced client service, and ensured recovery of some lost revenue, the FARE audit also had drawbacks. Because the FARE audit is based on a sample, while statistically valid, it did not provide enough detailed information for the agent to collect error fees from its clients for the errors made in ticketing. For example, the FARE audit generated an invoice that indicates that an agent owed $4500 because certain issued tickets did not meet the terms of the contract. Detailed information on the errors found in the original sample of transactions could be provided. However, detailed information on the errors found in the population as a whole were not available. In addition, supporting documentation to support the validity of the errors in the population as a whole were not available.
In view of the foregoing, there is a need for a process which minimizes the number of tickets audited, minimizes the incorrect memos, enhances client service, ensures recovery of lost revenue, and provides audit detail to support the error fees.